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3232LNG a Focus of Recent Executive Orderhttps://www.pipelinelaw.com/2019/05/29/lng-a-focus-of-recent-executive-order/
Wed, 29 May 2019 16:15:32 +0000https://www.pipelinelaw.com/?p=2719The Trump Administration’s recent executive order signals potentially significant changes to the regulatory landscape for domestic energy infrastructure generally and LNG in particular. Among the notable features of the order are the provisions directing US DOT to (1) update its 49 C.F.R. Part 193 regulations for LNG facility safety; and (2) issue regulations allowing LNG to be transported in approved rail tank cars.

Continue Reading]]>The Trump administration’s recent executive order, Promoting Energy Infrastructure and Economic Growth (April 10, 2019), signals potentially significant changes to the regulatory landscape for domestic energy infrastructure generally and LNG in particular. Among the notable features of the order (in addition to directives to EPA regarding Clean Water Act water quality certifications) are the provisions directing US DOT to (1) update its 49 C.F.R. Part 193 regulations for LNG facility safety and (2) issue regulations allowing LNG to be transported in approved rail tank cars. The order sets an ambitious deadline for these actions, requiring both to be completed by May 10, 2020.

Updates to LNG Safety Regulations

Part 193 LNG safety regulations govern the siting, design, installation or construction of LNG facilities, and they are largely based upon National Fire Protection Association Standard 59A (NFPA 59A), a consensus industry standard that is incorporated into Part 193 by reference. The order notes that current Part 193 regulations for LNG facilities “apply uniformly to small-scale peakshaving, satellite, temporary, and mobile facilities, as well as to large-scale import and export terminals.” Indeed, the Part 193 regulations were originally issued nearly 40 years ago—and have not been revised significantly since then to respond to the market shifts and innovations that have led to increasing interest in the development of large-scale LNG facilities.

In updating Part 193, the order directs DOT to use risk-based standards “to the maximum extent practicable.” This is consistent with DOT’s regulatory approach in other areas of transportation safety, such as its pipeline regulations in 49 C.F.R. Parts 190-195. While it is generally expected that DOT’s Part 193 efforts will focus on the incorporation of more a recent edition of NFPA 59A and potentially refine the exclusion zone approach in the Part 193 siting regulations, it remains to be seen whether DOT will take the opportunity to address a rulemaking mandate for small-scale LNG facilities that Congress included in the 2016 reauthorization of the Pipeline Safety Act. See S. 2276 (114th), PIPES Act of 2016 at Sec. 27(b) (requiring the Secretary of Transportation to “review and update the minimum safety standards prescribed pursuant to [49 U.S.C. 60103] for permanent, “small-scale liquefied natural gas pipeline facilities,” a term that is undefined in the statute or PHMSA regulations).

LNG Transport in Rail Tank Cars

The order also directs DOT to propose and finalize a rule permitting LNG to be transported in approved rail tank cars. This directive likely derived from a petition for rulemaking submitted to DOT in January 2017 by the Association of American Railroads (AAR) requesting a rule authorizing the transport of LNG by rail in DOT-113 tank cars. As AAR noted in its 2017 petition, “LNG is similar in all relevant properties to other hazardous materials that are currently authorized to be transported by rail.” The omission of LNG from DOT’s hazardous materials transportation regulations is thus likely a product of the fact that there has not previously been significant interest in LNG rail transport. DOT has apparently undertaken preliminary safety and economic reviews but has not yet published an ANPRM or any other documents in furtherance of the rulemaking. DOT’s most recent significant rulemakings report projects July 29, 2019, as the proposed rule publication date and September 27, 2019, as the end of the comment period on the proposed rule.

Continue Reading]]>Last week the Federal Energy Regulatory Commission (FERC) made some headway in how it evaluates greenhouse gas (GHG) emissions from natural gas-related projects. In recent FERC pipeline certification proceedings, the two Democrats on the Commission have been critical of how FERC addresses a project’s potential GHG emissions and climate change impacts. With only four active commissioners, this dispute has made it difficult to obtain the majority needed for FERC approval. In last week’s order, however, the two Republicans were joined by Commissioner Cheryl LaFleur, a vocal critic of the Commission’s approach, in authorizing a new liquefied natural gas (LNG) export terminal and associated natural gas pipeline in Louisiana. The commissioners were able to persuade LaFleur to issue a concurring opinion by expanding the environmental analysis of GHG emissions. This suggests that FERC’s commissioners may have found some new common ground that could serve as a model for the evaluation of future projects.

The project at issue involved the construction and operation of an LNG export terminal and associated facilities along the Calcasieu Ship Channel in Cameron Parish, Louisiana. FERC’s National Environmental Policy Act (NEPA) analysis evaluated the annual direct GHG emissions from the terminal’s construction and operation and compared them to national GHG emissions data compiled by the US Environmental Protection Agency (EPA). According to this analysis, the project would emit nearly 4 million tons of GHGs annually, potentially increasing national CO2 emissions by 0.07 percent. Due to the pending repeal of EPA’s Clean Power Plan and the pending withdrawal from the Paris climate accord, FERC noted that there are currently no national emissions targets to use as a benchmark for the project. The environmental analysis acknowledged that the construction and operation of the project would contribute incrementally to climate change, but concluded that FERC could not determine whether such a contribution would be significant. Ultimately, because it found that the project would be in the public interest, FERC approved the LNG terminal.

Commissioner LaFleur’s concurring opinion first notes the Natural Gas Act (NGA) provides the US Department of Energy (DOE) with exclusive authority over the export of natural gas, including the responsibility to consider whether the exportation is in the public interest. In terms of its environmental review, Commissioner LaFleur states that DOE, rather than FERC, has the responsibility to assess indirect impacts of LNG exports, but FERC must still satisfy its obligations under NEPA. Within that context, LaFleur expressed her appreciation for disclosing the direct GHG emissions of the project and for comparing them to national levels. Yet, she was critical of the Commission for not making a significance determination, stating “The magnitude of the direct GHG emissions from the Calcasieu Pass Project certainly appear to be significant, as contemplated by NEPA [but] the Commission has not identified a framework for making a significance determination.” LaFleur called on FERC to use the Social Cost of Carbon, which assigns a dollar amount to each ton of CO2 emissions, to assess the significance of the climate change impacts. Thus, while Commissioner LaFleur ultimately approved the project, she did so recognizing that FERC’s LNG export responsibilities are different than its responsibilities for pipelines and encouraged the Commission to adopt a framework to make a significance determination.

Commissioner Richard Glick was the lone dissenter. He repeated his past arguments that the Commission’s public interest determination must include an assessment of a project’s impact on climate change. “Neither the NGA nor NEPA permit the Commission to assume away the climate change implications of constructing and operating an LNG facility.” While Glick found that quantifying the project’s GHG emissions is a “necessary step” toward meeting FERC’s NEPA requirements, he argued that simply counting the volume of emissions is insufficient. Glick also echoed LaFleur’s recommendation to monetize the harms of climate change by using the Social Cost of Carbon, concluding that a rigorous examination of a project’s impacts on climate change would reduce the legal risk on appeal.

FERC’s approach of calculating and disclosing potential GHG emissions and then comparing those totals to state, regional and/or national climate change goals may serve as a model for FERC’s environmental analysis going forward. For some interstate natural gas pipeline projects the DC Circuit has upheld a similar approach. For example, as recently as February 19, 2019, the DC Circuit dismissed claims that FERC failed to adequately consider the downstream climate impacts of the Mountain Valley Pipeline, noting that “FERC provided an estimate of the upper bound of emissions resulting from end-use combustion….” Given DOE’s substantial role in approving LNG terminals, however, it remains to be seen whether Commissioner LaFleur will concur with similar environmental analyses of GHG emissions in the context of interstate natural gas pipeline projects.

]]>FERC and PHMSA MOU Intended to Increase Efficiency and Efficacy of LNG Reviewshttps://www.pipelinelaw.com/2018/10/08/ferc-phmsa-mou-intended-increase-efficiency-efficacy-lng-reviews/
Mon, 08 Oct 2018 17:24:18 +0000https://www.pipelinelaw.com/?p=2618The issuance of FERC and PHMSA’s Memorandum of Understanding (MOU) last month potentially signals an improved review and authorization process for Liquefied Natural Gas (LNG) projects, but only time will tell how the MOU will work in practice and if it will achieve its stated goal of increasing efficiency and effectiveness of the application review...

Continue Reading]]>The issuance of FERC and PHMSA’s Memorandum of Understanding (MOU) last month potentially signals an improved review and authorization process for Liquefied Natural Gas (LNG) projects, but only time will tell how the MOU will work in practice and if it will achieve its stated goal of increasing efficiency and effectiveness of the application review process in a manner that will “reduce expenses for LNG project applicants . . . and the U.S. taxpayer.” Perhaps as an indication of things to come in the FERC/PHMSA partnership under the MOU, FERC issued environmental schedules for twelve pending LNG projects on the very day that the MOU was issued that, according to the Commission, reflect FERC’s “efforts in recent months to streamline its review process for LNG project applications,” including by entering the MOU with PHMSA.

As previously reported, the MOU was entered pursuant to the “One Federal Decision” framework established under directives contained in Executive Orders issued earlier this year with the intent of providing a more predictable, transparent and timely federal review and authorization process for delivering major infrastructure projects. Improvements in this process are particularly important for LNG projects, which are subject to myriad complex regulatory requirements and require authorizations from multiple oversight agencies.

FERC reviews and approves the siting, construction, expansion and operation of LNG terminals under section 3 of the Natural Gas Act (NGA), and it issues certificates of public convenience and necessity for LNG and other facilities used for the interstate sale and transportation of natural gas under NGA section 7. The NGA also designates FERC as the lead agency for compliance with the environmental review procedures mandated by the National Environmental Policy Act (NEPA) for LNG facilities subject to its jurisdiction. Under the federal Pipeline Safety Act (PSA), PHMSA has exclusive authority to establish and enforce safety regulations for onshore LNG facilities. PHMSA regulations at 49 C.F.R. Part 193, Subpart B contain detailed siting requirements for LNG facilities, relying heavily upon the incorporation by reference of safety standards established by the National Fire Protection Association (NFPA). Part 193, Subpart B requires the calculation of both a “dispersion exclusion zone” and a “thermal exclusion zone” for LNG containers and transfer systems in accordance with models prescribed by various industry standards incorporated into the PHMSA regulations by reference. See 49 C.F.R. §§ 193.2057; 193.2059.

FERC has historically conditioned its approval of new LNG facilities upon compliance with PHMSA’s safety requirements in Part 193 (requiring, for example, evidence of a project’s ability to legally control activities in offsite exclusion zones, as mandated under PHMSA’s regulations, as a condition of certificate authorization). While FERC is deferential to PHMSA determinations of Part 193 compliance, obtaining concurrence on such compliance has not previously been subject to a specified deadline.

The MOU provides for PHMSA to issue a “Letter of Determination” to FERC as the authoritative determination of compliance with Part 193, Subpart B “no later than 30 days prior to the estimated issuance date of FERC’s final NEPA document” (unless PHMSA notifies FERC that it will not be able to meet this timeframe, explaining the reasons for the delay and setting a new date for compliance). The MOU also provides that the agencies will assist one another in inspection and enforcement activities by sharing information, including inspection findings, and that each will “keep the other informed of newly discovered or emerging safety issues or concerns.” In the MOU, the agencies commit to sharing or providing access to information and data submitted by LNG facility applicants or operators. The MOU leaves in place the 2004 Interagency Agreement between FERC, PHMSA and the US Coast Guard, which also provides for coordination and information-sharing among the signatory agencies with respect to the oversight of waterfront LNG facilities.

]]>PHMSA and FERC Commit to Permitting Process MOUhttps://www.pipelinelaw.com/2018/07/30/phmsa-and-ferc-commit-to-permitting-process-mou/
Mon, 30 Jul 2018 18:39:10 +0000https://www.pipelinelaw.com/?p=2605Earlier this month, the Pipeline and Hazardous Materials Safety Administration and the Federal Energy Regulatory Commission announced their intention to develop a memorandum of understanding (MOU) that would refine and reduce the permit application review process for proposed Liquefied Natural Gas (LNG) facilities. The announcement’s description of what the MOU will accomplish is consistent with the April 2018 multi-agency MOU: “The MOU will clarify each agency’s respective role in the permitting process for potential LNG projects, and implement procedures into the FERC’s authorization process that will leverage PHMSA’s safety expertise to evaluate potential impact to public safety.”

Earlier this month, the Pipeline and Hazardous Materials Safety Administration and the Federal Energy Regulatory Commission announced their intention to develop a memorandum of understanding (MOU) that would refine and reduce the permit application review process for proposed Liquefied Natural Gas (LNG) facilities. The announcement’s description of what the MOU will accomplish is consistent with the April 2018 multi-agency MOU: “The MOU will clarify each agency’s respective role in the permitting process for potential LNG projects, and implement procedures into the FERC’s authorization process that will leverage PHMSA’s safety expertise to evaluate potential impact to public safety.”

Continue Reading]]>A bipartisan group of Senators who serve on the Senate Committee on Commerce, Science and Transportation introduced a Pipeline Safety Act reauthorization bill in November, the Securing America’s Future Energy: Protecting Infrastructure of Pipelines and Enhancing Safety (SAFE PIPES) Act, Senate Bill 2276. That bill was approved by the Committee on December 9, 2015 with five amendments. Key provisions of the bill as amended include: (1) regulation of underground natural gas storage facilities; (2) temporary allowances for certified states who are not interstate agents to participate in inspection and oversight of interstate pipelines; (3) PHMSA/State post-inspection briefings, issuance of a final report or enforcement within 30 days of inspection, and (4) regulation of “small scale liquefied natural gas facilities.” The bill would reauthorize the Pipeline Safety Act, and PHMSA, through 2019 and significantly increase authorized funds for pipeline safety programs and grants.

In addition, the bill would require PHMSA to consult with FERC during its pre-filing procedures and permitting process for new natural gas pipeline construction (which the Agency already does voluntarily). Further, it would direct PHMSA to prioritize statutory rulemaking requirements over other rulemaking required after enactment (e.g., mandates leftover from the 2011 reauthorization such as gas and liquid integrity management rulemakings and whether to expand IMP, automatic and remote controlled valves, leak detection, accident notification, among others) and submit reports on the Agency’s progress. PHMSA would also report to Congress on metrics for natural gas leaks from distribution pipelines. The bill would require that pipeline oil spill response plans consider threats of discharge to navigable waters that may be covered in whole or in part by ice and provide for disclosure of unredacted plans to certain congressional committees.

The bill would require GAO audits of the following: feasibility of requiring odorization of all combustible gas in transportation; State policies regarding natural gas leaks; implementation of PHMSA final integrity management rules and those programs generally; and the Transportation Security Administration’s pipeline security program and other surface transportation programs. Other provisions target improved collaboration and information sharing with regard to: PHMSA and State regulatory inspections and oversight (i.e., consider developing a national integrated pipeline safety regulatory inspection database); pipeline integrity risk analysis, including ILI technology and data (i.e., consider developing a voluntary no-fault information sharing system); damage prevention through advances in pipeline mapping technology; and research and development (between PHMSA, industry, and public sector stakeholders).

The bill will now go before the full Senate for a voice vote, which Committee Chairman John Thune anticipates will happen some time next year.